Pub. 17 2018-2019 Issue 4

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E N O . 1 , 2 0 1 9 6 new jersey auto retailer Chairman’s MESSAGE | BY LENNY DATELLO Can New Jersey Jump-Start An Evolution In The Automotive Recall System? There is no doubt that the current system for issuing and addressing automotive recalls has many shortcomings. More than 200 million vehicles have been recalled by automakers in the past six years and more than a quarter of them (53 million) are still on the road and have yet to be repaired. None of us want dangerous vehicles on the road, but the only way to address the issue is to place the financial burden for repairs where it belongs — with the manufacturer of the vehicle. That’s exactly what NJ CAR is trying to do here in New Jersey. Federal law prohibits the sale of any new motor vehicle under re- call and requires automakers to pay dealers 1% per month of the wholesale value of grounded new vehicle inventory. Additional- ly, New Jersey State law requires manufacturers “to compensate (dealers) for all reasonable costs…relating to a product recall” affecting used vehicles. Manufacturers are required to pay deal- ers to fix their mistakes, but many of them are outright ignoring their responsibilities because they view recalls as an expense and have no incentive to complete them in a timely manner. Neigh- borhood auto dealers, on the other hand, view recalls as poten- tial revenue and will fight on their customer’s behalf. Recall legislation (S2740) passed the Senate on July 1, 2018 and was referred to the Assembly Consumer Affairs Committee but has stalled. The bill requires dealerships to notify car buyers of recalls on all used motor vehicles and includes a cap on attor- ney’s fees, but it only offers a partial solution to the consumer protection and highway safety issues associated with motor vehicle recalls. NJ CAR is working to jump-start this legislation by offering a variety of amendments to strengthen the laws that govern re- calls in New Jersey. This legislation could also serve as a model for improving the automotive recall system nationwide. The Coalition is encouraging Legislators to attack the issue on three fronts by requiring manufacturers to: 1. Provide notice to consumers and dealers regarding used vehicles under a safety recall and whether they are dan- gerous to sell. This amendment would provide a defense to any consumer fraud claim as long as a dealer checked the NHTSA website, (www.safercar.gov) and made a buyer aware of any outstanding recall. It would also cap attorney’s fees in consumer fraud actions at $1,000 or up to one-third of the amount of damages awarded. 2. Fairly compensate dealers who perform warranty and safety recall service and incur other costs associated with a recall. This amendment would better define the costs associ- ated with recalls by dealers. It would also provide protection from manufacturer penalties when a dealer brings a claim for reimbursement and would prohibit automakers from recover- ing costs of their compliance in another manner. 3. Take proactive steps to identify additional recall related dealer and consumer protections. Specifically, the bill would require automakers to provide the New Jersey Motor Vehicle Commission with a list of all vehicles registered in New Jersey which have been under recall for 6 months or more and have not yet been repaired. It would require the NJMVC to send a notice to registered vehicle owners with outstanding recalls. Manufacturers must be forced to live up to their obligations. NJ CAR will continue working with the bill sponsors to broad- en the scope of the stalled legislation. The Coalition will also soon call on dealers, their employees and industry supporters to contact their elected officials and encourage them to support the NJ CAR-backed amendments that will protect New Jersey’s auto retailers and improve consumer safety.